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Missed out on Nvidia and SMCI? Analyst says this stock is the ‘hidden AI gem’


Given the artificial intelligence (AI) surge, the spotlight has been heavily focused on two names, Nvidia (NASDAQ:NVDA) stock and Super Micro Computer Inc (NASDAQ:SMCI) stock. However, according to analysts at Baird, there’s another to watch — a stock hailed as the ‘hidden AI gem.’

As the demand for artificial intelligence continues to soar, this under-the-radar stock has captured the attention of analysts at the firm for its potential to also benefit from the technology.

Breathtaking rally in Nvidia, SMCI stock

As the demand for AI has continued to ramp up over the last year or more, stocks that are prominent “picks and shovels” names have experienced significant rallies.

Nvidia, an already big name in the semiconductor industry, has also become a major player in AI. As a result, its stock value has surged by more than 92% in 2024 and 251% in the last 12 months. The company’s pivotal role in powering AI applications has propelled its stock to all-time highs. Investors have reaped substantial rewards from Nvidia’s remarkable rally, solidifying its status as a frontrunner in the AI market.

Meanwhile, the percentage gain in SMCI has been even more impressive. Despite a recent dip, it is still up more than 272% in the year-to-date, while it has surged 824% in the last 12 months.

The company’s growth in the AI server market has seen it become a key beneficiary of the AI surge.

Baird bullish on SMTC (NASDAQ:SMTX) stock

With NVIDIA and SMCI already experiencing strong rises, many investors are now looking for the next big AI stock play. Analysts at Baird named one they believe is “very well positioned in the upcoming ramp of new AI platforms.”

In a note this week, the firm added Semtech Corporation (NASDAQ:SMTC) shares as a “Bullish Fresh Pick” following meetings with the company. “The ramp of LPOs and the next wave of optical links represent new, significant catalysts as well,” wrote the firm.

“We see a significant discrepancy between what we hear about Semtech (NASDAQ:SMTC)’s R&D capabilities, market positioning, opportunity for growth and design wins, versus the Street’s perception of the stock,” wrote the firm.

Describing Semtech as a “classic turnaround story,” Baird analysts added they believe Semtech is very well positioned due to the upcoming ramp of new AI platforms, as it is one of two players in the space qualified for high-density copper interconnect. Semtech is also well positioned with 800G modules in AI architectures, added the firm.

Furthermore, Baird said that in the new wave of optical investments, Semtech is “firmly entrenched as the leader on the basis of product performance, time to market, and depth of customer relationships.”

Meanwhile, Baird said the valuation remains very attractive. They also highlighted that the company is equally well positioned with the ramp of 5G Advanced next year, due to its 25G transceiver ICs.


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